Louisiana’s Cigar Tax Cap Bill Amended, Advances Through Committee

Louisiana’s bill to reduce taxes on premium cigars passed the Committee on Ways and Means with amendments, delaying its effective date and limiting the tax cut period.

Louisiana’s H.B. 325 Advances With Changes

A bill aimed at lowering taxes on premium cigars in Louisiana cleared an important legislative step yesterday, passing the Committee on Ways and Means by a 9-3 vote, though with key amendments.

Currently, Louisiana taxes cigars in two tiers based on price per 1,000 units:
• Cigars priced at $120 or less per 1,000 units face an 8% tax on the invoice price.
• Cigars over $120 per 1,000 units are taxed at 20%.

H.B. 325 targets the higher tax tier, proposing a fixed tax of 50 cents per cigar, which would benefit cigars with wholesale prices above $2.50. However, amendments to the bill have altered its timeline and duration.

Originally set to take effect July 1, 2025, the new tax rate will now begin January 1, 2026. Additionally, the 20% tax rate is reinstated as of January 1, 2028, meaning the lower 50-cent tax applies for only two years unless further legislative action extends it.

The bill’s impact will vary by cigar type. For example, a premium cigar with an MSRP of $9.50 currently priced around $11.40 in Louisiana humidors would drop to about $10 under the new tax. Conversely, some lower-cost bundle cigars priced around $2.99 could see a price increase under the fixed tax system.

The Louisiana House of Representatives is expected to vote on H.B. 325 next week, marking the next step in this evolving tax reform effort.